Employment policies and data

Governments must do more to help most vulnerable amid rising unemployment, urges OECD

15/05/09 - Governments must urgently adapt their labour market policies to help their most vulnerable citizens in the economic crisis. Key to this will be avoiding that the crisis further strengthens a disability benefit culture that pushes many people with disability or poor health onto benefit schemes and out of work for the rest of their lives, according to the OECD.

“Much more can and must be done,” said Aart de Geus, OECD Deputy Secretary-General. “Necessary structural reform will only happen if there is a change in social norms and attitudes so that people with partial work capacity genuinely feel their labour is wanted and needed by the economy.” For this, political vision and leadership as well as dialogue and partnerships of government with the social partners, the medical community and civil society are needed.

Ministers and state secretaries from 15 countries together with EU Commissioner Vladimir Špidla met to discuss what governments must do to help people with reduced work capacity caused by illness or disability. These people, among the groups being hard hit by the jobs crisis, already find it harder to get work and therefore, are more likely to live in poverty.

"We now know that most people who receive a disability benefit for more than a year will never work again.” John Martin, OECD Director of Employment, Labour and Social Affairs.

In 2007, the most recent year for which figures are available, just over 2 ¼ million more people in OECD countries received disability benefits than unemployment benefits (30.2 million compared with 27.9 million).

Ministers warned against repeating the mistakes of the past where in previous economic downturns, many older workers who lost their jobs were pushed onto disability benefit rolls rather than unemployment benefit schemes, thereby serving to cut the unemployment figures at a very large cost to the public finances. “While this may seem a harmless short-term measure, we now know that most people who receive a disability benefit for more than a year will never work again,” said John Martin, OECD Director of Employment, Labour and Social Affairs. “It is crucial that governments align short-term social protection measures taken in response to the downturn, with longer-term goals of economic security and strong labour force participation.”

Improved financial incentives are needed to help people on sickness and disability benefits: for health care and employment services to be provided in a way that keeps people with partial work capacity attached to the labour market; for employers to have the economic interest to retain workers with reduced work capacity; and for such workers to make every effort to remain in or return to work.

Governments should follow the initiatives of the Netherlands where employers are working together to form employer networks that facilitate the redeployment of workers no longer able to continue in their current role because of illness or injury. In Sweden, the medical community is working to apply new and world-leading guidelines that help general practitioners award sick leave in a way that maximises health and labour market outcomes.